At a Glance: Brazil’s top 5 payment companies

Over 35,000 credit and debit card transactions are carried out in Brazil each minute, according to data from credit card and services association Abecs.

The volume of these transactions – which include credit, debit and pre-paid cards – amounted to 1.31tn reais (US$317bn) in January-October 2019, meaning that the total for the full year is on track to surpass the 1.55tn reais recorded in 2018.

The industry forecasts 24% growth in card transactions to 2.3tn reais this year, fueled by increased acceptance of card brands and central bank measures aimed at boosting competition.

Furthermore, the payment area is the segment of greatest interest to fintechs in Brazil, as demonstrated by a broad annual study carried out by the Brazilian fintechs association, ABFintechs. Of the 205 fintechs tracked last year, 22% operated in the payment segment.

After that, the areas in which local fintechs most commonly operate are credit, financing and debt negotiation (21%); digital banking (10%); investment management (8%); financial management (7%) and insurance (4%).

The following is the list of the five largest payment companies in Brazil:

CIELO

The card processor remains Brazil’s largest player in the segment, but it has lost market share over the years as competition has intensified.

Cielo had a 42.5% share of the total volume of transactions in September, down from 50.2% in September 2018.

Founded in 1995 as Visanet (a JV between Bradesco, Banco do Brasil, Banco Nacional, Santander and Visa) the company was rebranded as Cielo in 2009, the year in which it opened up its capital to investment. Its controllers are Banco do Brasil and Bradesco.

Cielo ended 3Q19 with 2.8bn reais in revenues, down 5.5% year-on-year, which the company attributed to a pricing adjustment necessary in face of the growing competition. 

Net income more than halved in the period, reaching 358mn reais, as costs swelled 15% to 2.35bn reais. Cielo is due to release its 4Q19 results on January 28.

REDE

Controlled by Itaú Unibanco, Brazil’s largest private bank, Rede had a 29.4% market share in July-September, down from 31% 12 months earlier. The company was founded in 1996.

In the late 2000s and early 2010s, before government measures to further open up this market, Rede was part of a market duopoly with Cielo when it was still branded as Redecard. 

Itaú reported 900mn reais in revenues in the card acquisition segment in July-September, down 20.8% year-on-year, and 2.3bn reais in card issuance, up 2.7%. 

The company increased its financial volume by 4bn reais in 3Q19 compared to 2Q19, Rede CEO Marcos Magalhães told newspaper Estado. Amid a decline in market share, the company has bet on scale gains with the abolition of fees.

At the end of September, Rede had a total of 1.46mn POS terminals in service in the country, an increase of 328,000 in one year.

GETNET

Controlled by Santander, Getnet had 12.8% of the total volume of transactions in July-September, an increase of 1.3 percentage points from the third quarter of 2018.

According to Santander's financial report, revenues from cards and services rose 2.4% in 3Q19 to 1.49bn reais. The figures refer mostly to Getnet’s operations.

Getnet recently announced a partnership with digital bank Banco Original, which includes the reduction of certain fees for bank customers and faster payments to all retailers, among other measures.

Getnet was bought by Santander for 1.1bn reais in 2014.

STONE

One of Brazil's unicorns (with a market valuation of over U$1bn), Stone is considered one of the most innovative payment companies in Brazil and a trailblazer in the segment.

The fintech was founded in 2012, but it was not until 2014 that it actually went live. In July-September 2017, the company had only 3.8% of the market, a share that climbed to 8% in 3Q19.

The company ended Q3 with 671mn reais in revenues, up 62.1% year-on-year. Adjusted net income reached 202mn reais, increasing 126%. The company also reported a total payment volume of 32.6bn reais, some 10.9bn reais more than in July-September 2018.

In October 2018, Stone Payments entered the US stock market, raising over US$1.22bn and officially becoming a unicorn.

PAGSEGURO

Another big fish in the Brazilian card segment, Pagbank’s PagSeguro reached a 7.3% market share of the volume of transactions in July-September, up from 3.5% in the same three months of 2017.

The company reported net revenues of 1.46bn reais in Q3, with net income of 343mn reais, up 28.6% and 48.0%, respectively. 

Meanwhile, active merchants (POS terminals) totaled 5mn, some 1.2mn more terminals in 12 months.

PagSeguro is controlled by the UOL group, which is owned by Brazilian media conglomerate Grupo Folha. The group publishes the local newspaper Folha de S. Paulo.

With aggressive and subsidized offers, some of which include 0% fees for retailers, the company has been a major contributor to the intense competition and the tight margins in the industry. 

In its latest move, the company announced that anyone that buys the Moderninha X terminal will be fully exempted from service charges. 

PagSeguro also launched an international card with annual fees in partnership with Visa last December.